Q: Was I deducted the correct amount of federal tax on my final check?
I received my last paycheck and my company deducted 22% from my federal tax instead of the usual 12%. When I asked the payroll employee she said that it was because manual checks some how have a higher tax. Does that sound correct? I live in California and am an hourly employee.
A:
There is not a higher tax rate applied to final checks because they are final checks. However, if the final check was larger than a normal pay period check, such as including all remaining PTO, the rate applied to the larger amount could be higher for a couple of reasons. It could be that the increased money put you in a higher percentage rate bracket, or it could be that the taxes were calculated as if it was one pay period worth of money, making it seem your annual income was far higher than it normally is. This happens quite often when a large lump sum is paid out by the employer when a lawsuit over wages is paid.
It would be wise for you to talk to your tax person about this.
1 user found this answer helpful
A:
The withholdings may consist of various taxes, federal income tax, state income tax, federal social security and medicare tax and SDI. I hope this helps and Good luck. Zaher Fallahi, Esq, CPA (CA &D.C.).
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